Car sales tax bill advances in Senate (AUDIO)

The legislature is moving to rewrite the definition of the local sales tax to resolve a multi-million dollar problem caused by the state supreme court ruling.

The Revenue Department estimates municipalities and counties are losing five million dollars a month in taxes on vehicles bought in other states because the supreme court has ruled local governments cannot collect use taxes on vehicles bought outside the state unless voters had approved the use tax. And they couldn’t collect a sales tax on those purchases because the sales tax applies only to in-state purchases.

The Senate has advanced Senator Mike Kehoe’s bill saying sales taxes, not use taxes, will apply to those purchases. His bill says those sales taxes can be collected as soon as the bill becomes law But the local governments have to ask voters sometime during the next three years if they want to repeal the sales tax.

Missouri car, boat, trailer, RV, and motorcycle dealers say they’re losingthousands of dollars in business to dealers in other states who advertise that consumers can save hundreds of dollars in sales taxes if they buy outside Missouri.